Realty Executives Midwest
As we move into the latter half of the year, questions about what’s to come are top of mind for buyers and sellers. Near record-low mortgage rates coupled with rising home price appreciation kicked off a robust housing market in the first half of 2021, but what does the forecast tell us about what’s on the horizon?
Many experts are projecting a rise in interest rates. The latest Quarterly Forecast from Freddie Mac states:“We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”
However, even as mortgage rates rise, the anticipated increase is expected to be modest at most, and still well below historical averages. Rates remaining low is good news for homebuyers who are looking to maximize their purchasing power. The same report from Freddie Mac goes on to say:“While higher mortgage rates will help slow the pace of home sales and moderate house price growth, we expect overall housing market activity will remain robust. Our forecast has total home sales, the sum of new and existing home sales, at 7.1 million in 2021….”
Joe Seydl, Senior Markets Economist at J.P. Morgan, projects home prices to continue rising as well, indicating buyers interested in purchasing a home should do so sooner rather than later. Waiting for rates or home prices to fall may not be wise:“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
Home prices are rising, but they should moderate as more housing inventory comes to market. George Ratiu, Senior Economist at realtor.com, notes there are signs that we may see the current inventory challenges lessen, slowing the fast-paced home price appreciation and creating more choices for buyers:“We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”
New home starts are also showing signs of improvement, which further bolsters hopes of more options coming to market. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), writes:“As an indicator of the economic impact of housing, there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.”
Finally, while it may not fundamentally change the market conditions we’re currently experiencing, another reason to be optimistic more homes might come to market: our improving economy. Mark Fleming, Chief Economist at First American, notes:“A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.”
As we look at the forecast for prices, interest rates, inventory, and home sales, experts remain optimistic about what’s on the horizon for the second half of 2021. Contact your trusted real estate advisor to discuss how to navigate the market together in the coming months.
Article Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
You may have been told that it’s important to get pre-approved at the beginning of the homebuying process, but what does that really mean, and why is it so important? Especially in today’s market, with rising home prices and high buyer competition, it’s crucial to have a clear understanding of your budget so you stand out to sellers as a serious homebuyer.
Being intentional and competitive are musts when buying a home right now. Pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan. Just as important, being able to present a pre-approval letter shows sellers you’re a qualified buyer, something that can really help you land your dream home in an ultra-competitive market.
With limited housing inventory, there are many more buyers active in the market than there are sellers, and that’s creating some serious competition. According to the National Association of Realtors (NAR), homes are receiving an average of 5.1 offers for sellers to consider. As a result, bidding wars are more and more common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war.
Freddie Mac explains:
“By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”
Every step you can take to gain an advantage as a buyer is crucial when today’s market is constantly changing. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals such as a loan officer and a trusted real estate agent making sure you take the right steps and can show your qualifications as a buyer when you find a home to purchase.
In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.
Article Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
In today’s booming housing market, sellers have their pick of home offers. According to a study by Realtor.com, the median home listing price is up 15.6% compared to last year.
Now, more than ever, sellers have a chance to get more money for their homes. And while this is great for sellers, it leaves buyers asking: “How can I stand out in such a competitive market?”
One way buyers can stand out is with their offer. This isn’t the market for low offers, which is why buyers may think the only option is putting in a high offer. This often means going above the listing price. But what happens when the seller accepts that high offer and the home appraisal comes in far lower?
Before purchasing a house, a buyer’s lender will hire an appraiser to appraise a home. The goal of an appraisal is to ensure the price of the home matches or exceeds the home’s listing price. If it does, everything is fine. But if it doesn’t, things can get complicated.
If the appraisal is lower than the home’s price, a lender won’t approve the loan for that amount. For example, if the listing price is $300,000 but it appraisers for $250,000, the buyer now has to come up with the difference.
There are several reasons why a home with a high price tag might not appraise for as much. For one, bidding wars (like the ones we’re currently seeing) can cause listing prices to skyrocket, even if the home isn’t necessarily worth the price.
With that said, if the appraisal comes in too low, you have a few options:
How to avoid paying more?
Buyers should consider adding an appraisal gap coverage clause in their offer. To put it simply, appraisal gap coverage is when a buyer agrees to cover a certain amount of the difference between the offer price and the appraisal value – if, in fact, there’s an appraisal gap.
For example, let’s say you offer $200,000 on a home. In your appraisal gap coverage clause, you could say you’re willing to pay $10,000 over the appraised value. If the appraised value ends up being equivalent to the listing price, you don’t have to pay any extra money. But if the appraised value is under, be prepared to come to the table with more money.
The benefit of having an appraisal gap coverage clause is it shows the seller you’re serious about purchasing the home, without you having to offer an obscene amount of money. It also provides you with the option to cancel the contract, if there’s an appraisal gap.
Article Source: HousingWire
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
Vacation Home Sales Surge During COVID-19 Pandemic
In the months after COVID-19 hit the United States, vacation home sales shot up, likely the combined result of low-interest rates, a desire to escape amid social distancing and lockdown, and an unprecedented ability to work from anywhere.
It’s part of a major cultural shift around work and homebuying in the United States. For real estate agents working in hot vacation home markets, it’s been a busy year.
“Now that people have that opportunity to work remotely, I think they’re really considering where they want to spend most of their time,” said Bethany Martinez, a Broker Associate and head of The Bemar Team at RelatedISG, a real estate firm in South Florida.
“That’s what I’m seeing. I’m seeing people come down here and say, ‘I can live in South Florida for six months out of the year, three months out of the year, because I can work from anywhere.’”
Pandemic Boost
In mid-2020, vacation home sales began to outperform total existing home sales, the result of “a pandemic boost,” the National Association of REALTORS® says. An estimated 109,100 homes intended for vacation use were sold in 2020 from July to September compared to 75,600 vacation homes sold during that same period in 2019, a 44% increase year over year. In comparison, total existing-home sales during July-September rose 13% year over year (1.72 million in 2020 vs. 1.52 million in 2019).
“The pandemic and low mortgage rates have increased the desirability and affordability of owning a vacation home,” NAR says in a blog discussing the data. “Buyers may be desiring a vacation home as a weekend getaway as urban-based leisure activities are still constrained by social distancing.
The ability to work from home means buyers who can work from home can spend more time at and enjoy their vacation home. Historically low mortgage rates have also made a home purchase more affordable while rising prices in past years have yielded larger home equity gains that can be tapped (through, say, a home equity loan) to use for a down payment.”
Vacation homes also sold more quickly than they had in the past. Of second homes where the sale closed during July-September 2020, 58% sold within one month, NAR says. That echoes a nationwide trend caused by low inventory: 71% of existing homes that closed in September were on the market for less than one month.
Vacation Homes & Rentals
Martinez also noted that an increasing number of people are interested in buying a second home that they can rent out while they’re away.
“They’re not just looking for themselves anymore,” she said. “They’re also looking for our advice to educate them on, ‘Well, if I want to own a home in South Florida, what do you think is the best area that I could rent out while I’m away?’”
Advising clients on buying a second home that they plan to rent out requires in-depth local knowledge, including knowing which cities or condo associations have restrictions on rentals from sites like Airbnb, Martinez said.
For example, the area where she works is especially condo-heavy, “so, we know what the rules and regulations are with condos,” she said. “We can already tell you, if you’re looking to rent this out short-term, 90% of the condos are not going to work.”
That’s why she has a list of condo associations that allow monthly or daily rentals.
“The legwork has already been done, because it helps save us time, too, when we’re working with clients,” she said.
When she’s working with a buyer, Martinez focuses on helping them find a home that will give them the lifestyle they’re seeking.
“South Florida is very, very large — there’s Miami-Dade County, there’s Broward County, there’s West Palm, there are so many parts to it, there are suburbs, there are cities,” she said. “So, it’s really just seeing like, ‘With the money that you want [to spend] and the lifestyle you want to live, where can I position you in South Florida, and how will that affect your lifestyle? Is it going to take you 10 levels up from where you are now, or maybe not?’ ... But when it comes to an investment standpoint, it’s an easy sale.”
Working in a Hot Vacation Home Market
Real estate agents who want to work with vacation homes should start by looking at what’s already happening in their city, Martinez says.
She recommends using tools such as AirDNA, which provides vacation rental data, to research your area. She also browses vacation rental websites such as Airbnb or Vrbo to see which areas are popular and how much it costs to rent properties there.
“It’s not rocket science, it’s just kind of learning what’s out there and getting familiar with the inventory,” she said. “If you know that there’s a really hot neighborhood located next to a city, or maybe a place where people like to go camping, and you see that people are already doing vacation rentals there, you can start marketing those areas.”
Above all, she encourages real estate agents to take advantage of new opportunities.
Part of her business is fixing and flipping properties to sell, and at one point, she had several properties that just weren’t selling for the price that she wanted.
“One of those properties ended up turning into an Airbnb property and now is generating so much income,” she said. “Right now, we’re in a low-inventory phase, so houses are selling like crazy. But at one point, we weren’t this busy, and there was a lot of opportunity for houses that maybe couldn’t sell but could be rented out as short-term vacation properties… It’s just always looking at the opportunity in things, and being able to create opportunity, even when there is none.”
We couldn’t have said it better ourselves — so get out there, do your research, and you too could turn your local vacation home market into your next real estate niche.
Article Source: The CE Shop
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
Today’s housing market is full of unprecedented opportunities. High buyer demand paired with record-low housing inventory is creating the ultimate sellers’ market, which means it’s a fantastic time to sell your house. However, that doesn’t mean sellers are guaranteed success no matter what. There are still some key things to know so you can avoid costly mistakes and win big when you make a move.
When inventory is low, like it is in the current market, it’s common to think buyers will pay whatever we ask when setting a listing price. Believe it or not, that’s not always true. Even in a sellers’ market, listing your house for the right price will maximize the number of buyers that see your house. This creates the best environment for bidding wars, which in turn are more likely to increase the final sale price. A real estate professional is the best person to help you set the best price for your house so you can achieve your financial goals.
Today, homeowners are living in their houses for a longer period of time. Since 1985, the average time a homeowner owned their home, or their tenure, has increased from 5 to 10 years (See graph below):
This is several years longer than what used to be the historical norm. The side effect, however, is when you stay in one place for so long, you may get even more emotionally attached to your space. If it’s the first home you purchased or the house where your children grew up, it very likely means something extra special to you. Every room has memories, and it’s hard to detach from that sentimental value.
For some homeowners, that connection makes it even harder to separate the emotional value of the house from the fair market price. That’s why you need a real estate professional to help you with the negotiations along the way.
We’re generally quite proud of our décor and how we’ve customized our houses to make them our own unique homes. However, not all buyers will feel the same way about your design and personal touches. That’s why it’s so important to make sure you stage your house with the buyer in mind.
Buyers want to envision themselves in the space so it truly feels like it could be their own. They need to see themselves inside with their furniture and keepsakes – not your pictures and decorations. Stage, clean, and declutter so they can visualize their own dreams as they walk through each room. A real estate professional can help you with tips to get your home ready to stage and sell.
Today’s sellers’ market might be your best chance to make a move. If you’re considering selling your house, reach out to a local real estate professional to help you navigate through the process and prioritize these key elements.
Article Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
Realty Executives agents are real estate experts. They have the education and expertise you need to navigate through the process of buying or selling a home. From listing at the right price to making the best offer, our Executives have witnessed the best - and most regrettable - decisions homeowners and homebuyers can make. Every day, they are immersed in every aspect of real estate that includes comparable home price analysis, property surveys, credit reports, open houses, HOA agreements, lenders, title companies, homeowners’ insurance, walk-throughs, terms of sale or purchase, repairs, concessions and closing documents. Let our accomplished Executives help navigate you through the process of buying or selling a home.
